Tuesday, January 27, 2009

The Case Against Commodity Cloud Exchanges

-- Update ---I'm happy to announce that we've launched SpotCloud, the first Cloud Capacity Clearinghouse and Marketplace. Check it out at www.spotcloud.com --The concept of a commodity cloud exchange is something that I've been talking about for several years. Notably Sun Microsystems also proposed it back in 2005. Recently a new start-up spun out out of Deutsche Telekom called Zimory is attempting to use this as the nexus of their enterprise focused hybrid cloud platform. The company describes itself as the first 'global marketplace for cloud resources' to enable organizations to buy or sell extra computing capacity.

For those of you unfamiliar with the concept of a cloud exchange, the concept is to provide a central financially focused exchange where companies are able to trade standardized cloud capacity in the form of a futures contract; that is, a contract to buy specific quantities of a compute / storage / bandwidth capacity in the form of a commodity at a specified price with delivery set at a specified time in the future. The contract details what cloud asset is to be bought or sold, and how, when, where and in what quantity it is to be delivered, similar to a bandwidth exchange or clearing house. The exchange may be public or private akin to private exchanges / ECNs on the stock market, where membership is by invitation only

As I dug a little deeper into the Zimory's web interface I noticed that Zimory is actually not really a marketplace so much as a multi-cloud management platform. The platform does little to address security, audibility, accountability, or trading/futures contracts. My first question is why should I trust their cloud providers and how do I know they're secure?

Another problem with the platform is their approach to capacity access. It appears that you are forced to use their platform, a platform that has no API or web services that I could see. Also their approach to a SLA is not very obvious, they broadly describe three levels, Bronze, Silver and Gold with no insight into what these levels actually represent. We are too just take them at their word.

Upon closer examination of the Zimory platform it appears to be nothing more than an open source hybrid cloud computing platform with an "ebay" marketing spin. So lets for a moment assume that a Commodity Cloud Exchange is a service that businesses actually want. (I'm not convinced they do) If this is the case, is a random start-up such as Zimory really in a position to offer such a service? And if so, should this exchange look like ebay or should it look more like a traditional commodities exchange? My opinion is the latter. What worries me about such a cloud exchange is the first thought that comes to mind is Enron, who attempted a similar bandwidth focused offering in the late 90's.

If we truly want to enable a cloud computing exchange / marketplace, maybe a better choice would be to build upon an existing exchange platform with a proven history. A platform with an existing level of trust, governance as well as compliance such astheChicago Mercantile Exchange's Globex electronic trading platform or even the NasDaq.

Creating a cloud exchange has less to do with the technology and more to do with the concept of trust and accountability. If I'm going to buy XX amount of regional capacity for my Christmas rush I want to rest assured that the capacity will be actually available. And more importantly at a quality of service & location that I've agreed upon. I also need to be assured that the exchange is financially stable and will remain in business for the foreseeable future . All of which Zimory doesn't offer.

Trust and security aside, To make Zimory attractive, they need to enable a marketplace that allows its users to buy additional capacity based on economic / costing factors that matter. For example being able to define a daily budget for your app, similar to the way AdWords spending works. There needs to be a fine-grained control over this budget so you can apply it across CPU, network bandwidth, disk storage, location with a focus on future requirements (futures). I should be able to trade / swap any unused capacity as easily as I originally bought it. There needs to be provider quota system that allows for the assurance that a certain amount of cloud capacity is always available to the "exchange" with a priority level. There should be multiple types of trading contracts as well as an indepth audit trail with a clear level of transparency within the entire trading process.

At the end of the day, I'm not convinced we're ready for "standardized" cloud exchanges. The cloud computing industry is still emerging, there are no agreed upon standards for how we as an industry can collaborate as partners yet alone trade capacity. In a lot of ways I feel Zimory is putting the cart before the horse and is probably 5-10 years too early.

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Reuven Cohen ~ @ruv

An instigator, part time provocateur, bootstrapper, amateur cloud lexicographer, and purveyor of random thoughts, 140 characters at a time.

Reuven is an early innovator in the cloud computing space as the founder of Toronto based Enomaly in 2004 (Acquired by Virtustream in 2012). Enomaly was among the first to develop a self service infrastructure as a service (IaaS) platform (ECP) circa 2005. As well as SpotCloud (2011) the first commodity style cloud computing Spot Market.

Today he leads Citrix (NASDAQ: CTXS) world wide advocacy efforts with a particular focus on increasing the volume, reach and influence of Citrix's extensive portfolio of technology solutions used by more than 260,000 customers and 100 million end users across the globe.

Reuven writes "The Digital Provocateur" column for Forbes Magazine, he is the co-founder of CloudCamp (100+ Cities around the Globe) CloudCamp is an unconference where early adopters of Cloud Computing technologies exchange ideas and is the largest of the ‘barcamp’ style of events. He is also the co-host of the DigitalNibbles Podcast sponsored by Intel